Your money checklist for travelling overseas
30 Aug 2022
Planning an overseas holiday? Here are some tips on choosing the financial products to pack for your trip.
If you’ve spent the pandemic dreaming of dusting off your passport and jetting overseas, now is your time.
“Borders are open and travel-starved Aussies are heading overseas to reunite with family and friends and savour the thrill of being out in the big, wide world again,” said Effie Zahos, Editor-at-Large, Canstar.
In June 880,860 people spread their wings and went overseas, according to Australian Bureau of Statistics data. This is 221,000 more trips than the previous month and a huge jump of 545,620 compared to March.
If you’re one of the lucky ones packing your bags you may be wondering what’s ahead for the Australian dollar. “Volatility is expected to continue and that could affect the spending power of Aussies overseas. So, it may pay to lock in when you find a good rate,” said Ms Zahos.
A volatile exchange rate isn’t the only thing that can make your dollars disappear. How you access money can impact your holiday budget too.
“Changing money at airport currency bureaus is a sure-fire way to eat into your holiday kitty before you’ve even taxied down the runway,” said Ms Zahos.
To make your travel dollars go further here are some of the travel money options you should consider packing.
Travel debit cards
Using your usual debit card to make purchases or withdraw money could chew through your dollars faster than you’d like. According to Canstar data, using a debit card to withdraw $100 from an overseas ATM could cost up to $8 and that’s before the tally includes any fees from the international ATM provider.
“Your bank may charge fees for using overseas ATMs, the international bank may charge ATM fees, and there can be currency conversion fees. Added together all those fees can spell fewer cappuccinos in a cute café in Italy or ruin your plans for a lavish hotel stay in London,” said Ms Zahos.
“The best travel debit cards have no currency conversion fees or overseas ATM fees and they give back by offering cashback rewards or relatively high interest, up to 2.25%.”
As you can see from the table below, for example, HSBC’s Everyday Global Account pays 2% cashback (up to $50) each month when you tap and pay on eligible transactions under $100 and the Macquarie Bank and Citi accounts both pay interest – although with Citi you need to have at least $25,000 in your account to earn interest.
Selection of Outstanding Value Award-Winning Travel Debit Cards with High Account Interest Rates or Cashback Rewards
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| Provider | Account | Interest Rate/Cashback |
|---|---|---|
| Citi | Global Currency Account | 2.2% interest if you have at least $25k in your AUD account. |
| HSBC | Everyday Global Account | 2% cashback (up to $50) each month when you tap and pay on eligible transactions under $100. |
| ING | Orange Everyday | International ATM withdrawal and transaction fee rebate applies when you deposit $1,000+ and make at least 5 eligible card purchases each month. Also offer a 1% cashback on utility bills up to $100 per financial year (using BPAY or Direct Debit). |
| Macquarie Bank | Transaction Account | 2.25% interest rate for balances up to $250k. |
| ubank | Spend Account | $20 cashback using the referral code BONUS20 and making 3 card purchases in your first 30 days. |
Source: www.canstar.com.au. Based on Canstar’s 2022 Travel Credit and Debit Card Star Ratings and Awards (September 2022).
Travel money cards
If you’re super-conscious of sticking to a budget, loading cash onto a travel money card may be your go-to. These cards are widely accepted, you can lock in an exchange rate before you go, and if they are lost or stolen they can be replaced.
The best travel money cards have low transaction fees and offer exchanges at the interbank rate. That’s the rate that banks use when trading foreign currency between each other, with a mid-point used between the buy and sell rates across two currencies.
“That feature has the potential to save people hundreds of dollars in conversion fees that can apply to other travel money card options,” said Ms Zahos.
Most providers offer a range of currencies, which is handy if you’re planning to skip around the globe, stopping at a bunch of destinations.
“There are a few things to look out for if you’re using these cards,” warned Ms Zahos. “Overseas ATMs and merchants may charge transaction fees to use them, there can be a cross-currency fee if you need to convert money to another currency, and check if your provider charges to get any unused money back or inactivity fees when you return home.”
One provider charges a $4 per month inactivity fee after 12 months of inactivity as well as a $10 fee to close the card. Canstar’s 5-star-rated travel money cards – Revolut Travel Money Card standard and Wise Travel Money Card – have no inactivity or closure fees.
Canstar’s 5-Star Travel Money Cards
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| Provider | Card | Inactivity/ Closure/ Unload fees | Number of currencies available | ATM Fees |
|---|---|---|---|---|
| Revolut | Travel Money Card – Standard | None | 27+ | ATM withdrawals up to $350 (or currency equivalent) each month billing cycle are free, above $350 incurs a 2% withdrawal fee. |
| Wise | Wise Travel Money Card | None | 50+ | 2 Free ATM withdrawals each month (Up to $350). Afterwards charges $1.50 per withdrawal, above $350 incurs an additional 1.75% fee. |
Source: www.canstar.com.au. Based on Canstar’s 2022 Travel Money Card Star Ratings and Awards (June 2022).
Credit cards
Planning on flexing the plastic overseas? Credit cards can be an easy option for purchases but avoid using them to get cash. “Interest rates and fees for a cash advance from a credit card are already high and if you’re withdrawing money overseas a currency conversion fee and possibly an international ATM fee will be added to the transaction,” said Ms Zahos. Check out the table below to get an idea of how much you may be charged.
Median Credit Card Cash Advance Rates and Fees
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| Interest rate | 21.24% |
|---|---|
| International ATM fee* | |
| Percentage of amount | 3% |
| Flat fee | $3 |
| Currency conversion fee | 3% |
Source: www.canstar.com.au. Based on Canstar’s 2022 Travel Credit and Debit Card Star Ratings and Awards (September 2022). Based on credit cards rated in the Regular Overseas Traveller profile. *International ATM Fee is usually charged as either the percentage or flat fee, whichever is higher.
Some credit cards offer rewards points and, for regular travellers, these may help offset some of the costs associated with using the card. Canstar’s research found that Bankwest, Commonwealth Bank and ANZ credit cards offer outstanding value (see table below).
Top 3 Outstanding Value Award-Winning Travel Credit Cards by Net Cost*
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| Provider | Card | Net Cost* | Purchase rate | Annual fee | Currency conversion fee | Waivers / Special offers / Rewards points |
|---|---|---|---|---|---|---|
| Bankwest | Zero Platinum Mastercard | $0 | 14.99% | $0 | 0.0% | No foreign transaction fees when you shop internationally and 0% p.a. for 34 months on balance transfers. |
| Commonwealth Bank | Low Fee Gold Mastercard | $0 | 19.74% | $89 (annual fee waived in first year) | 0.0% | Offers $300 cashback for applicants before 31 October 2022, conditional on spending $1,500 on purchases within 90 days of card activation. Annual fee waived if you spend $10k+ on purchases or cash advances. |
| ANZ | Rewards Travel Adventures Card | $4.27 | 20.24% | $120 | 0.0% | New card offer of 40,000 bonus ANZ Reward Points after spending $1,000 on eligible purchases in the first 3 months. Earn 1.5 ANZ Reward Points for every $1 spent up to and including $2,000; earn 0.5 ANZ Reward Point for every $1 spent over $2,000. |
Source: www.canstar.com.au. Award winners and Net Cost based on Canstar’s 2022 Travel Credit and Debit Card Star Ratings and Awards (September 2022). Based on the Regular Overseas Traveller profile. *To determine the Net Cost/Benefit of a Travel Credit Card, Canstar considers the net amount available to the cardholder for spending on their trip, after fees for owning and using the card are offset against the cash equivalent of rewards point, if applicable.
Travel money tips
- Look for a travel debit card that has no account-keeping fees, currency conversion fees, or overseas ATM fees and offers cashback or high interest rates.
- If you want to withdraw cash, use a fee-free debit card or a travel money card rather than your credit card.
- Have a plan B. “If your wallet is lifted on the Paris Metro or a fraudster goes on a spending spree with your credit card you may need a travel money back-up plan,” said Ms Zahos.
- Check your travel money card uses the interbank exchange rate, covers the currencies you need, and has low transaction fees. And cancel it when you’re back on home ground if you’re liable to be hit with inactivity fees.
- Make sure you know how to reload your travel money card. If a shopping spree or unexpected expenses sees your funds running low before you are homeward bound you can often avoid a fee if you reload online.
Travel insurance
While overseas trips can be full of surprises, it can hurt your hip pocket if they are of the nasty kind. That’s why travel insurance is important.
Accidents, lost luggage, stolen wallets can all up-end your holiday spending plan. But concerns about cancellations for a COVID-19-related reason are still probably at the forefront of most people’s minds.
Many travel insurers now provide some cover for COVID-19-related claims. “Some will offer cover for hospitalisation or cancellation costs incurred because of COVID-19-related events. But always check the limits on the cover provided,” said Ms Zahos.
Look at what cover they provide if you get COVID-19 before you leave; if you get COVID-19 while you’re away; and if you have to isolate because you’re a close contact.
“There are cooling-off periods for COVID-19 cancellation cover so it’s always best to buy travel insurance as soon as you book your trip. Some insurers will only cover you for cancellation if you test positive for COVID-19 and the policy was purchased more than 21 days before your scheduled departure,” warned Ms Zahos.
If you can’t travel because of a lockdown at home or your intended destination you may not be covered for cancellation.
→ Related: Is there any travel insurance that covers COVID-19?
Travel insurance tips
- Tempted to go with the free travel insurance offered by your credit card provider? Read the fine print. Often it’s basic cover that will protect you for fewer situations and has lower limits. Plus, you may have to activate it in some way.
- Planning to let your adventurous side go wild overseas? Check what activities are covered before letting loose on the ski fields or abseiling over a cliff. Even golf may not be covered by a basic policy.
- Comprehensive policies cover more situations including possibly a rental car excess, cancellation costs, and trip delays but it’s still important to check limits and exclusions in the fine print.
Cover image source: oneinchpunch/Shutterstock.com
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